Google sacrifices of Google Labs to Product Focus

Google announced the news on its official blog, stating, "We're prioritizing our product efforts. As part of that process, we've decided to wind down Google Labs. While we've learned a huge amount by launching very early prototypes in Labs, we believe that greater focus is crucial if we're to make the most of the extraordinary opportunities ahead."

The post goes on: "In many cases, this will mean ending Labs experiments -- in others we'll incorporate Labs products and technologies into different product areas. And many of the Labs products that are Android apps today will continue to be available on Android Market."

A Google rep, Jason Friedenfelds, did emphasize that not all manner of Google labs are going away. "We don't have any plans to change in-product experimentation channels like Gmail Labs or Maps Labs. We'll continue to experiment with new features in each of our products," he told me.

The news inevitably raises questions as to how this shift will affect future innovation from Google. One the one hand, the announcement does signal potentially greater business maturity at Google. A little more focus and discipline with its R&D dollars, channeled toward specific products and divisions, could mean that the company will roll out even better-polished products with broader appeal more quickly. That's certainly how Google is spinning it.

Google's investment in R&D is by no means trivial, either. Last year, the company spent $3.7 billion on R&D, compared to $29.3 billion in operating revenue. That represents a 12.6 percent investment in R&D. For the sake of comparison, Oracle spent $4.5 billion on R&D while taking in $35.6 billion, a 12.6 percent investment; Microsoft spent $8.7 billion on R&D against $62.5 billion in revenue, a 13.9 percent investment; IBM reported spending $6.0 billion on research and development against $99.9 billion in revenue, meaning it put just 6 percent of operating revenue into R&D; HP raked in $126 billion while spending $3 billion on research and development (2.4 percent), and Apple spent $1.8 billion, compared to its operating revenue of $65.2 billion. That works out to 2.8 percent.

So yes, Google has said it will keep pouring resources into innovation, sans the technology incubator that was Google Labs. One must wonder, though, if the closure will result in hampering the type of creation and innovation for which Google is known. After all, plenty of well-known, well-liked, commercially successful products have emerged from Google Labs, such as Gmail and Google Calendar. (So, too, have less popular products like Google Wave and the App Inventor for Android.) Will Google employees still have the opportunity, resources, and incentive to experiment and innovate as they did in Google Labs? Or will they be required to formulate business plans with earnings projections before they can hammer out a single line of code?

One also wonders whether the closure of Google Labs and the associated focus on products will have an adverse impact on employee morale. Would-be job applicants have been lured to Google in the past by the prospect on working on side projects, on company time, for the sake of technological creativity as opposed to cold, hard profitability. Eliminating Google Labs and the freedom it allowed could give some Googlers pause to re-evaluate their job satisfaction.

Notably, employees who have left Google, including Dhanji Prasanna and Douwe Osinga, have cited the company's shift to "product focus" as a reason for departing. The general impression: Google has become a less fun place to work because of the narrow product focus, which also has resulted in internal battles for position and over how employees are rewarded for particular efforts.

Ideally, Google will be able to strike a balance between keeping shortsighted shareholders happy on a quarterly basis, while continuing to invest in developing Google Labs-type products and features under an umbrella other than the Google Labs moniker. Those sorts of experiments arguably amount to good old-fashioned research and development. Further, they're evidently a way to keep engineers and developers engaged and excited about their jobs, traits any good CEO wants from his or her employees.